TOWN OF INDIALANTIC POLICE OFFICERS AND FIREFIGHTERS RETIREMENT SYSTEM ACTUARIAL VALUATION REPORT AS OF OCTOBER 1, PDF

Please download to get full document.

View again

of 42
All materials on our website are shared by users. If you have any questions about copyright issues, please report us to resolve them. We are always happy to assist you.
Information Report
Category:

Reviews

Published:

Views: 0 | Pages: 42

Extension: PDF | Download: 0

Share
Related documents
Description
TOWN OF INDIALANTIC POLICE OFFICERS AND FIREFIGHTERS RETIREMENT SYSTEM ACTUARIAL VALUATION REPORT AS OF OCTOBER 1, 2016 CONTRIBUTIONS APPLICABLE TO THE TOWN'S PLAN/FISCAL YEAR ENDED SEPTEMBER 30, 2018
Transcript
TOWN OF INDIALANTIC POLICE OFFICERS AND FIREFIGHTERS RETIREMENT SYSTEM ACTUARIAL VALUATION REPORT AS OF OCTOBER 1, 2016 CONTRIBUTIONS APPLICABLE TO THE TOWN'S PLAN/FISCAL YEAR ENDED SEPTEMBER 30, 2018 December 21, 2016 Town of Indialantic c/o Ms. Jennifer Small 216 Fifth Avenue Indialantic, FL Re: Town of Indialantic Police Officers and Firefighters Retirement System Dear Jennifer: We are pleased to present to the Board this report of the annual actuarial valuation of the Town of Indialantic Police Officers and Firefighters Retirement System. The valuation was performed to determine whether the assets and contributions are sufficient to provide the prescribed benefits and to develop the appropriate funding requirements for the applicable plan year. Please note that this valuation may not be applicable for any other purposes. The valuation has been conducted in accordance with generally accepted actuarial principles and practices, including the applicable Actuarial Standards of Practice as issued by the Actuarial Standards Board, and reflects laws and regulations issued to date pursuant to the provisions of Chapters 112, 175, and 185, Florida Statutes, as well as applicable federal laws and regulations. In our opinion, the assumptions used in this valuation, as adopted by the Board of Trustees, represent reasonable expectations of anticipated plan experience. Future actuarial measurements may differ significantly from the current measurements presented in this report for a variety of reasons including: changes in applicable laws, changes in plan provisions, changes in assumptions, or plan experience differing from expectations. In conducting the valuation, we have relied on personnel, plan design, and asset information supplied by the Town and the Board of Trustees, financial reports prepared by the Plan s Custodian Bank, and the actuarial assumptions and methods described in the Actuarial Assumptions section of this report. While we cannot verify the accuracy of all this information, the supplied information was reviewed for consistency and reasonableness. As a result of this review, we have no reason to doubt the substantial accuracy of the information and believe that it has produced appropriate results. This information, along with any adjustments or modifications, is summarized in various sections of this report Parker Commons Blvd., Suite 104 Fort Myers, FL (239) Fax (239) The undersigned is familiar with the immediate and long-term aspects of pension valuations, and meets the Qualification Standards of the American Academy of Actuaries necessary to render the actuarial opinions contained herein. All of the sections of this report are considered an integral part of the actuarial opinions. To our knowledge, no associate of Foster & Foster, Inc. working on valuations of the program has any direct financial interest or indirect material interest in the Town of Indialantic, nor does anyone at Foster & Foster, Inc. act as a member of the Board of Trustees of the Town of Indialantic Police Officers and Firefighters Retirement System. Thus, there is no relationship existing that might affect our capacity to prepare and certify this actuarial report. If there are any questions, concerns, or comments about any of the items contained in this report, please contact me at Respectfully submitted, Foster & Foster, Inc. By: Douglas H. Lozen, EA, MAAA Enrolled Actuary # DHL/lke Enclosures TABLE OF CONTENTS Section Title Page I Introduction a. Summary of Report 5 b. Contribution Impact of Annual Changes 7 c. Changes Since Prior Valuation 8 d. Comparative Summary of Principal 9 Valuation Results II Valuation Information a. Reconciliation of Unfunded 15 Actuarial Accrued Liabilities b. Detailed Actuarial Gain/Loss Analysis 16 c. Actuarial Assumptions and Methods 17 d. Valuation Notes 20 e. Partial History of Premium Tax Refunds 21 f. Excess State Monies Reserve 22 III Trust Fund 23 IV Member Statistics a. Statistical Data 29 b. Age and Service Distribution 30 c. Valuation Participant Reconciliation 31 V Summary Plan Provisions 32 VI Governmental Accounting Standards 35 Board Disclosure Information Town of Indialantic Police Officers' and Firefighters' Retirement System FOSTER & FOSTER 4 SUMMARY OF REPORT The regular annual actuarial valuation of the Town of Indialantic Police Officers and Firefighters Retirement System, performed as of October 1, 2016, has been completed and the results are presented in this Report. The contributions developed in the valuation apply to the plan/fiscal year ended September 30, The funding requirements, compared with amounts developed in the October 1, 2015 actuarial valuation, are as follows: Valuation Date Applicable Plan/Fiscal Yr. End 10/1/2016 9/30/ /1/2015 9/30/2017 Total Required Contribution % of Total Annual Payroll 27.76% 27.69% Member Contributions (Est.) % of Total Annual Payroll 5.00% 5.00% Town and State Required Contribution % of Total Annual Payroll 22.76% 22.69% State Contribution ¹ 79,320 79,320 % of Total Annual Payroll 7.68% 7.68% Balance from Town ² % of Total Annual Payroll 15.08% 15.01% ¹ The State Contribution shown above represents the amount received in calendar year It is important to point out that the Fire portion of the state contribution is pursuant to the mutual consent agreement between the Fire Union and the Town. Additionally, the Police portion of the state contribution is pursuant to the traditional interpretation of Chapter 99-1, Florida Statutes. ² For budgeting purposes, the required Sponsor Contribution (Town and State) is 22.76% of pensionable earnings for the fiscal year ending September 30, The precise Town requirement for the year is this amount, less allowable State Contributions. Additionally, there is a prepaid Town contribution of $52, for the fiscal year ended September 30, 2016 which is available to help offset the above stated requirements. Town of Indialantic Police Officers' and Firefighters' Retirement System FOSTER & FOSTER 5 Experience since the prior valuation has been more favorable than expected, on the basis of the Plan s actuarial assumptions. The primary component of favorable experience was from average increases in pensionable earnings that were below the assumed rate. As can be seen, in spite of the fact that the Plan generated a net actuarial gain for the year, the funding requirements (when expressed as a percentage of payroll) increased since the previous valuation. This increase is due to assumption changes that were made in conjunction with this valuation, as described on page 8. The balance of this report presents additional details of the actuarial valuation and the general operation of the Fund. The undersigned would be pleased to meet with the Board of Trustees in order to discuss the Report and answer any pending questions concerning its contents. Respectfully submitted, FOSTER & FOSTER, INC. By: Douglas H. Lozen, EA, MAAA By: Drew D. Ballard, EA, MAAA Town of Indialantic Police Officers' and Firefighters' Retirement System FOSTER & FOSTER 6 CONTRIBUTION IMPACT OF ANNUAL CHANGES (1) Contribution Determined as of October 1, % (2) Summary of Contribution Impact by component: Change in Available State Money 0.3% Investment Return (Actuarial Asset Basis) 0.1% Salary Increases -1.2% Change in Normal Cost Rate 0.0% Change in Administrative Expense Percentage -2.1% Payroll Change Effect on UAAL Amortization 0.0% Active Decrements 0.1% Inactive Mortality 0.3% Assumption Changes 2.9% Other -0.1% Total Change in Contribution 0.32% (3) Contribution Determined as of October 1, % Town of Indialantic Police Officers' and Firefighters' Retirement System FOSTER & FOSTER 7 CHANGES SINCE PRIOR VALUATION Benefit Changes There have been no benefit changes since the prior valuation. Actuarial Assumption/Method Changes There have been three assumption changes made in conjunction with this valuation, as outlined below: - The payroll growth assumption has been lowered from 2.20% to 1.96% per year in order to comply with Part VII of Chapter 112, Florida Statutes. - The investment return assumption was lowered from 8.00% to 7.90% per year, net of investment related expenses, as previously approved by the Board of Trustees. - As mandated by Chapter , Laws of Florida, the assumed rates of mortality were changed from the RP-2000 Combined Healthy Tables to the mortality tables for special risk employees used by the Florida Retirement System actuary in the July 1, 2015 actuarial valuation. Town of Indialantic Police Officers' and Firefighters' Retirement System FOSTER & FOSTER 8 COMPARATIVE SUMMARY OF PRINCIPAL VALUATION RESULTS A. Participant Data New Assump Old Assump 10/1/ /1/ /1/2015 Actives Service Retirees DROP Retirees Beneficiaries Disability Retirees Terminated Vested Total Total Annual Payroll $1,033,076 $1,033,076 $1,002,747 Payroll Under Assumed Ret. Age 1,033,076 1,033,076 1,002,747 Annual Rate of Payments to: Service Retirees 99,202 99,202 99,202 DROP Retirees 96,877 96,877 96,877 Beneficiaries 26,341 26,341 26,341 Disability Retirees 140, , ,468 Terminated Vested 26,626 26,626 26,626 B. Assets Actuarial Value (AVA) ¹ 7,442,507 7,442,507 6,925,916 Market Value (MVA) ¹ 7,339,203 7,339,203 6,684,334 C. Liabilities Present Value of Benefits Actives Retirement Benefits 4,546,818 4,426,063 4,084,241 Disability Benefits 36,241 38,174 37,614 Death Benefits 66,252 29,347 28,876 Vested Benefits 193, , ,942 Refund of Contributions 30,495 30,500 34,452 Service Retirees 972, , ,976 DROP Retirees¹ 1,234,063 1,202,807 1,112,375 Beneficiaries 302, , ,752 Disability Retirees 1,457,424 1,430,687 1,437,763 Terminated Vested 303, , ,164 Excess State Monies / Share Plan 1,591 1,591 1,871 Total 9,144,891 8,842,352 8,400,026 Town of Indialantic Police Officers' and Firefighters' Retirement System FOSTER & FOSTER 9 New Assump Old Assump C. Liabilities - (Continued) 10/1/ /1/ /1/2015 Present Value of Future Salaries 5,764,288 5,786,939 5,779,969 Present Value of Future Member Contributions 288, , ,998 Normal Cost (Retirement) 166, , ,227 Normal Cost (Disability) 4,813 5,098 4,668 Normal Cost (Death) 5,144 2,219 2,019 Normal Cost (Vesting) 9,468 9,186 8,569 Normal Cost (Refunds) 6,924 6,924 7,128 Total Normal Cost 192, , ,611 Present Value of Future Normal Costs 903, , ,064 Accrued Liability (Retirement) 3,777,176 3,671,261 3,302,292 Accrued Liability (Disability) 17,583 18,171 17,365 Accrued Liability (Death) 46,128 20,807 20,051 Accrued Liability (Vesting) 120, , ,342 Accrued Liability (Refunds) 8,357 8,367 9,011 Accrued Liability (Inactives) ¹ 4,270,053 4,128,934 4,045,030 Excess State Monies / Share Plan 1,591 1,591 1,871 Total Actuarial Accrued Liability (AL) 8,241,346 7,966,140 7,496,962 Unfunded Actuarial Accrued Liability (UAAL) 798, , ,046 Funded Ratio (AVA / AL) 90.3% 93.4% 92.4% Town of Indialantic Police Officers' and Firefighters' Retirement System FOSTER & FOSTER 10 D. Actuarial Present Value of New Assump Old Assump Accrued Benefits 10/1/ /1/ /1/2015 Vested Accrued Benefits Inactives ¹ 4,270,053 4,128,934 4,045,030 Share Plan Balance Actives 2,438,949 2,339,212 1,989,497 Member Contributions 481, , ,152 Total 7,191,116 6,950,260 6,470,679 Non-vested Accrued Benefits 212, , ,799 Total Present Value Accrued Benefits (PVAB) 7,404,097 7,156,824 6,737,478 Funded Ratio (MVA / PVAB) 99.1% 102.5% 99.2% Increase (Decrease) in Present Value of Accrued Benefits Attributable to: Plan Amendments 0 0 Assumption Changes 247,273 0 New Accrued Benefits 0 142,637 Benefits Paid 0 (252,201) Interest 0 528,910 Other 0 0 Total 247, ,346 Town of Indialantic Police Officers' and Firefighters' Retirement System FOSTER & FOSTER 11 New Assump Old Assump Valuation Date 10/1/ /1/ /1/2015 Applicable to Fiscal Year Ending 9/30/2018 9/30/2018 9/30/2017 E. Pension Cost Normal Cost (with interest) $200,446 $194,240 $188,875 % of Total Annual Payroll ² Administrative Expenses (with interest) 19,452 19,462 39,573 % of Total Annual Payroll ² Payment Required to Amortize Unfunded Actuarial Accrued Liability over 26 years (as of 10/1/2016, with interest) 66,976 43,255 49,148 % of Total Annual Payroll ² Total Required Contribution 286, , ,596 % of Total Annual Payroll ² Expected Member Contributions 51,654 51,654 50,137 % of Total Annual Payroll ² Expected Town and State Contribution 235, , ,459 % of Total Annual Payroll ² F. Past Contributions Plan Years Ending: 9/30/2016 Town and State Requirement 191,998 Actual Contributions Made: Members (excluding buyback) 47,618 Town 107,701 State 84,296 Total 239,615 G. Net Actuarial (Gain)/Loss (75,534) ¹ The asset values and liabilities for DROP Members include accumulated DROP Balances as of 9/30/2016 and 9/30/2015. ² Contributions developed as of 10/1/2016 are expressed as a percentage of total annual payroll at 10/1/2016 of $1,033,076. Town of Indialantic Police Officers' and Firefighters' Retirement System FOSTER & FOSTER 12 H. Schedule Illustrating the Amortization of the Total Unfunded Actuarial Accrued Liability as of: Year Projected Unfunded Actuarial Accrued Liability , , , , , , I. (i) 3 Year Comparison of Actual and Assumed Salary Increases Actual Assumed Year Ended 9/30/ % 7.00% Year Ended 9/30/ % 7.00% Year Ended 9/30/ % 7.00% (ii) 3 Year Comparison of Investment Return on Actuarial Value Actual Assumed Year Ended 9/30/ % 8.00% Year Ended 9/30/ % 8.00% Year Ended 9/30/ % 8.00% (iii) Average Annual Payroll Growth (a) Payroll as of: 10/1/2016 $1,033,076 10/1/ ,652 (b) Total Increase 21.45% (c) Number of Years (d) Average Annual Rate 1.96% Town of Indialantic Police Officers' and Firefighters' Retirement System FOSTER & FOSTER 13 STATEMENT BY ENROLLED ACTUARY This actuarial valuation was prepared and completed by me or under my direct supervision, and I acknowledge responsibility for the results. To the best of my knowledge, the results are complete and accurate, and in my opinion, the techniques and assumptions used are reasonable and meet the requirements and intent of Part VII, Chapter 112, Florida Statutes. There is no benefit or expense to be provided by the plan and/or paid from the plan's assets for which liabilities or current costs have not been established or otherwise taken into account in the valuation. All known events or trends which may require a material increase in plan costs or required contribution rates have been taken into account in the valuation. Douglas H. Lozen, EA, MAAA Enrolled Actuary # Please let us know when the report is approved by the Board and unless otherwise directed we will provide copies of the report to the following offices to comply with Chapter 112 Florida Statutes: Mr. Keith Brinkman Bureau of Local Retirement Systems Post Office Box 9000 Tallahassee, FL Ms. Sarah Carr Municipal Police and Fire Pension Trust Funds Division of Retirement Post Office Box 3010 Tallahassee, FL Town of Indialantic Police Officers' and Firefighters' Retirement System FOSTER & FOSTER 14 RECONCILIATION OF UNFUNDED ACTUARIAL ACCRUED LIABILITIES (1) Unfunded Actuarial Accrued Liability as of October 1, 2015 $571,046 (2) Sponsor Normal Cost developed as of October 1, ,474 (3) Expected administrative expenses for the year ended September 30, ,051 (4) Expected interest on (1), (2) and (3) 57,724 (5) Sponsor contributions to the System during the year ended September 30, ,998 (6) Expected interest on (5) 6,850 (7) Expected Unfunded Actuarial Accrued Liability as of September 30, 2016 (1)+(2)+(3)+(4)-(5)-(6) 599,447 (8) Change to UAAL due to Assumption Change 275,206 (9) Change to UAAL due to Actuarial (Gain)/Loss (75,534) (10) Chapter Allocation from Fire Portion of Excess State Monies (280) (11) Unfunded Actuarial Accrued Liability as of October 1, ,839 Type of Date Years 10/1/2016 Amortization Base Established Remaining Amount Amount method change and benefit change 10/1/ $490,989 $51,877 assum. change 10/1/ ,846 23,021 method change 10/1/ ,635 21,342 actuarial loss 10/1/ ,429 25,278 actuarial gain 10/1/ (40,703) (20,928) method change 10/1/ (157,388) (17,570) benefit change 10/1/ (585) (45) actuarial loss 10/1/ ,084 29,277 actuarial loss 10/1/ ,010 40,474 actuarial loss 10/1/ ,344 29,325 actuarial gain 10/1/ (162,682) (31,091) benefit change 10/1/ (42,882) (3,064) software change 10/1/ (39,547) (3,522) actuarial gain 10/1/ (181,107) (30,467) actuarial gain 10/1/ (354,408) (53,559) actuarial gain 10/1/ (62,588) (8,629) actuarial gain 10/1/ (75,534) (9,618) allocation 10/1/ (280) (23) assum. Changes 10/1/ ,206 22, ,839 64,431 Town of Indialantic Police Officers' and Firefighters' Retirement System FOSTER & FOSTER 15 DETAILED ACTUARIAL (GAIN)/LOSS ANALYSIS (1) Unfunded Actuarial Accrued Liability (UAAL) as of October 1, 2015 $571,046 (2) Expected UAAL as of October 1, ,447 (3) Summary of Actuarial (Gain)/Loss, by component: Investment Return (Actuarial Asset Basis) 4,836 Salary Increases (92,532) Active Decrements 7,191 Inactive Mortality 22,791 Other (17,820) Increase in UAAL due to (Gain)/Loss (75,534) Chapter Allocation from Fire Portion of Excess State Monies (280) Assumption Changes 275,206 (4) Actual UAAL as of October 1, 2016 $798,839 Town of Indialantic Police Officers' and Firefighters' Retirement System FOSTER & FOSTER 16 ACTUARIAL ASSUMPTIONS AND METHODS Mortality Rate Healthy Lives: Female: RP2000 Generational, 100% Annuitant White Collar, Scale BB Male: RP2000 Generational, 10% Annuitant White Collar / 90% Annuitant Blue Collar, Scale BB Disabled Lives: Female: 60% RP2000 Disabled Female set forward two years / 40% Annuitant White Collar with no setback, no projection scale Male: 60% RP2000 Disabled Male setback four years / 40% Annuitant White Collar with no setback, no projection scale The assumed rates of mortality were mandated by Chapter , Laws of Florida. This law mandates the use of the assumptions used in either of the two most recent valuations of the Florida Retirement System (FRS). The above rates are those outlined in the July 1, 2015 FRS actuarial valuation report for special risk employees. We feel this assumption sufficiently accommodates future mortality improvements. Previously, the RP 2000 Combined Healthy Sex Distinct with disabled lives set forward 5 years was utilized. Interest Rate Retirement Age Early Retirement 7.90% (previously 8.00%) per year compounded annually, net of investment related expenses. This is supported by the target asset allocation of the trust and the expected long-term return by asset class. Earlier of: 1) age 55, or 2) age 52 and the completion of 25 years of Credited Service. Also, any Member who has reached Normal Retirement is assumed to continue employment for one additional year. This assumption is consistent with long-term plan experience, and therefore deemed reasonable. Commencing with the earliest Early Retirement Age (50), Members are assumed to retire with an immediate subsidized benefit at the rate of 10% per year. This assumption was reviewed and adopted by the Board as the result of an Experience Study performed in Town of Indialantic Police Officers' and Firefighters' Retirement System FOSTER & FOSTER 17 Disability Rate Termination Rate Salary Increases Final Year Salary Load See table that follows (1201). It is assumed that 75% of Disability occurrences are Line-of-Duty related. These rates are consistent with the national average for municipal special risk plans. See table that follows. This assumption was reviewed and adopted by the Board as the result of an Experience Study performed in % per year until the assumed retirement age; see table that follows. This assumption was reviewed and adopted by the Board as the result of an Experience Study performed in Years until Normal Retirement as of 10/1/2012 Load Assumption Less than 5 years 15% At least 5, less than 10 years 10% 10 or more years 5% Notwithstanding the above, the load assumption is 0% for Members with less than 5 years of Credited Service as of September 30, The above rates are based on d
Recommended
View more...
We Need Your Support
Thank you for visiting our website and your interest in our free products and services. We are nonprofit website to share and download documents. To the running of this website, we need your help to support us.

Thanks to everyone for your continued support.

No, Thanks
SAVE OUR EARTH

We need your sign to support Project to invent "SMART AND CONTROLLABLE REFLECTIVE BALLOONS" to cover the Sun and Save Our Earth.

More details...

Sign Now!

We are very appreciated for your Prompt Action!

x